High Product Quality – a Major Challenge and Opportunity for China

March 7, 2012, by Mats Harborn, Beijing

Swedish Quality has for many years been a strong and internationally well-known concept. Sweden is also recognized as one of the most innovative nations in the world. This is no coincidence, because there is a clear connection between quality and innovation, a connection that China needs to understand deeper if it is to succeed in its endeavor of becoming an Innovative Nation by 2020.

Quality is nothing new to China. It is enough to look at Chinese antiquities – ceramics, old furniture, old buildings, clothes and other things from the imperial age, and you realize that China was producing goods of the highest quality. However, due to a complex array of reasons China emerged as a nation in 1979 in a desperate need to totally rebuild itself. At this time the country was more concerned with solving immediate problems, rather than solving the problems in a resource efficient way. This circumstance together with the fact that the market economy was poorly developed and competition immature lead to an economy where producing “good enough” products sufficed.

Since the focus has been on solving problems quickly there has been a widespread tendency to avoid the obstacles that you constantly meet when your task is to develop and produce a product of the highest quality. Instead shortcuts are the name of the game or rather ways around the problem that makes the product work – for the moment.

Having quality as the guiding star, on the other hand, does not allow for such short term solutions. The search for excellence forces the innovators and the whole organization to solve all problems encountered. This may be exceedingly painful, but equally rewarding when a solution to a problem has been found. Part of the innovative, problem solving process is to allow for mistakes and failures. As in scientific experiments, failed experiments also teach us something.

China, coming out of a 30 year period of a command economic model is still suffering from many societal and organizational structures from this period that do not encourage experimenting, failures and wide cross functional cooperation. This is further holding back both the development of innovation and the resulting high quality products.

In industry, we see clearly how industries in China not only are governed by one ministry, but often by several governmental bodies, with little internal coordination. The result is a regulatory framework, full of contradictions and with poor enforcement. This is a huge problem, because innovation is often driven by the combination of strict market competition, but also an enlightened, future looking regulatory framework of a country or of a trade union.

There is no lack of innovative brains in China. On the contrary China produces more engineers than any other nation, but they need the right environment and the right guidance to bloom out. Foreign companies setting up R&D centres in China witness that their local employees are as innovative as any employee and are often much more hard-working and dedicated to the task.

We also see impressive indigenous innovation in China in areas such a solar power, pharmaceuticals, online social and business portals, applications for handheld devises etc. Most of these are however, developed for the specific needs of the Chinese domestic market and are still limited seen in the whole context of the Chinese economy.

For China to be a real creator of internationally sellable innovations the whole of society needs to gear up for this challenge. It starts at the top. When Swedish business delegations meet with Chinese top leaders we are often commanded for our high quality and innovative products and solutions, but we are also told that we are too expensive to succeed in China. This can of course be a conceited strategy to encourage more foreign investments in China, but it could also be an alarming lack of understanding of the difference between the investment cost and the life cycle benefit of a product or of a solution.

The beautiful thing, which China yet has to realize, is that high quality products and solutions are most often also more economic and more sustainable than cheap low quality alternatives. I often say that developed nations cannot afford cheap products.

If the Chinese leaders insist on directing China in a direction of cheap products, and with an inconsistent regulatory framework, China will not only find itself with a continued high real cost for most things in society, with environmentally unsustainable systems, but also it will find itself without real and valuable innovation.

It all starts with the concept of quality!






Mats Harborn
Executive Director, Scania China Strategic Centre, Chairman Swedish Chamber of Commerce in China


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